Proman and Methanex react to CBAM

TRINIDAD and Tobago’s largest petrochemical operator, Proman which produces methanol, ammonia, urea, melamine, and natural gas has commissioned a study to determine the impact new taxes on the carbon intensity of products entering the European Union will have on its business.

“With all these (Carbon Border Adjustment Mechanism) CBAM there is a financial impact, at the end of the day these are taxes being levied on product and it does impact on our competitiveness,” said the managing director of Proman’s ammonia plants Jerome Dookie.

He warned it could negatively impact the price of global fertiliser.

The European Union’s Carbon Border Adjustment Mechanism places a tax on carbon-intensive goods entering the Union and could make T&T’s exports of ammonia and other goods more expensive and less competitive.

“For Proman in particular, we are in the midst of doing an impact assessment in terms of the overall impact on our business and obviously there will be actions coming out of that and at the end of the day it comes down to having a lower carbon intensity,” said Dookie.

Speaking at the Energy Chamber’s Sustainable Energy Conference Dookie said some of T&T’s trading partners are introducing trade policies that will result in taxes on trade imports, including commodities based on their carbon intensity.

In addition, banks are limiting access to capital for the development of hydrocarbons.

Dookie said there are already reporting obligations and the transition period has already started.

He said Proman was not in a terrible position because it was already reducing the carbon intensity of its products by capturing carbon dioxide from its ammonia production and using it to produce methanol and also by operating its offshore gas-producing facility with the use of wind and solar to power its platform.

“We do have a nice portfolio of products that allow for carbon minimisation for want of a better word. It is already well known that we capture CO2 bi-product from our ammonia production and use it to produce methanol, not just from our plant but other plants on the estate as well,” said Dookie.

He revealed there is already a pipeline system in place at Point Lisas to bring the CO2 to Proman to produce methanol and reduce the venting into the atmosphere.

“We need to be proactive and dealing with this thing aggressively up front, to ensure there is compliance around the reporting and encourage collaboration across the sector,” Dookie said.

Methanex which produces 12% of the world’s methanol said its CBAM does not apply to methanol and therefore it does not expect negative impacts on its operations nor exports, from Trinidad to the EU.

The company said it is committed to lowering its carbon footprint and is well placed to meet its corporate goal to reduce 2030 emission intensity by 10% vs 2019 benchmark.

“The transition to a low carbon economy is expected to be expensive and, in many cases, require significant investment. Whilst we understand this, we maintain our commitment to support this transition and continuously evaluate our current opportunities to identify additional pathways,” the company told Express Business in an email.

It argued that methanol has a unique opportunity to help with the transition to a low-carbon economy, in both decarbonising downstream chemical products and transportation fuels inclusive of the marine industry.

In Trinidad and Tobago, Methanex said it has two world-class plants that are “very efficient and are supported by an ongoing investment programme”.

“The transition to a low carbon economy is expected to be expensive and, in many cases, require significant investment. Capital has to compete with projects globally, and to that extent, Trinidad and Tobago needs to be competitive. Additionally, the government is working on several fronts to increase the country’s gas production, which will be critical to our ongoing operations,” Methanex stated.

Methanex provided three key reasons its believes methanol has an important role to play in the low-carbon economy.

Methanol has multiple decarbonisation pathways available

No matter how it is produced, methanol is the same essential chemical building block that can be used in multiple chemical and fuel-related applications. Methanol can also be made from renewable sources, thereby supporting the long-term decarbonisation of the transportation sector and the chemicals that make modern life possible. The ability to blend conventional and low-carbon methanol allows for gradual introduction of low-carbon methanol while also achieving local air quality benefits.

Methanol can leverage existing infrastructure

One of the greatest challenges in achieving the transition to a low-carbon economy is the massive investment required in new energy infrastructure. Methanol is widely available around the world today and can leverage existing production facilities, as well as storage and transportation infrastructure. Methanol is liquid at ambient temperature and pressure, which allows it to make use of existing tankers, storage tanks and pipelines around the world. Finally, engine designs require relatively minor modifications to use methanol as fuel in cars, trucks, and ships, making a transition to methanol relatively easy and more affordable.

Methanol can support the decarbonisation of the Shipping Industry

While shipping is the most energy-efficient way to carry cargo (in terms of energy use per tonne-kilometre transported), it accounts for three per cent of global CO₂ emissions. Transitioning maritime shipping to lower-carbon fuels could have tremendous economic and environmental benefits. Using conventional methanol as a fuel significantly reduces air emissions such as SO×, NO×, and particulate matter during combustion.